HARJINDER SINGH GILL,KOLKATA vs. ITO, WARD-40(3)/ KOLKATA, KOLKATA

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ITA 673/KOL/2023Status: DisposedITAT Kolkata24 February 2025AY 2013-145 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no capital gain arose in the current assessment year (AY 2013-14). The Tribunal noted that while a joint development agreement was entered into, no money was received under it, and it was never performed or executed. The land was sold by both co-owners on 28.08.2017, and the capital gain arose in AY 2018-19, for which tax was paid. The Tribunal observed that in the case of the other co-owner, Guramrit Singh Gill, the same plea was accepted by the AO in reassessment proceedings for AY 2013-14, and no addition was made. The reasoning provided in the co-owner's case indicated that the initial agreement did not involve a sale, no cash or kind was received, and the actual sale took place in AY 2018-19. Therefore, the Tribunal disagreed with the CIT(A)'s conclusion. The addition was directed to be deleted. No issue was expressly left undecided.

What were the facts?

The assessee, Harjinder Singh Gill, filed his return of income for Assessment Year (AY) 2013-14, declaring an income of ₹5,00,950. The case was reopened under Section 147, and the Assessing Officer (AO) issued a notice under Section 148. The AO noted that the assessee executed a joint development agreement on 25.06.2012, concerning a property where he held a 50% share. The AO computed a long-term capital gain of ₹1,46,41,326 as the assessee's share, treating it as a sale of property. The assessee contended that no money was received, the agreement was not executed, and a fresh agreement was entered into on 29.08.2017, where the land was sold, and tax was paid in AY 2018-19. The AO made the addition. The National Faceless Appeal Centre, Delhi (CIT(A)) dismissed the assessee's appeal for non-compliance.

What were the issues?

1. Whether the addition of ₹1,46,41,326 as long-term capital gain is bad in law, considering the original development agreement became infructuous and a fresh agreement was entered into on 29.08.2017, turning on Section 147 of the Income Tax Act, 1961. Assessee's contentions: The original joint development agreement was never executed or carried through, and no money was received. A fresh agreement was entered into on 29.08.2017, wherein the assessee agreed to sell his share for an agreed consideration, and tax on the capital gain was paid in AY 2018-19. The case is covered by the order in the case of co-owner Guramrit Singh Gill, where the AO accepted similar contentions and held that capital gain did not arise in AY 2013-14. Revenue's contentions: The fact of non-execution of the joint development agreement was never before the AO and was not verified. The Revenue suggested restoring the appeal to the AO for verification.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(1),Section 148,Section 143(3),Section 50C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

For Appellant: Shri Miraj D Shah, AR
For Respondent: Shri Subhro Das, DR
Hearing: 13.02.2025Pronounced: 24.02.2025

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 28.06.2023 for the AY 2013-14.

2.

At the time of hearing of the assessee pressed ground no.2, which is extracted below:-

“2. That on the facts and circumstances of the case addition of ₹1,46,41,326/- is bad in law as original development agreement had become infructuous and a fresh agreement was entered into between the parties on 29.08.2017.” 03. The facts in brief are that the assessee filed the return of income on 26.09.2013, which was processed u/s 143(1) of the Act on 07.01.2014, declaring income of ₹5,00,950/-. The case of the assessee was reopened u/s 147 of the Act by issuing notice u/a 148

4.

In the appellate proceedings , the ld CIT(A) dismissed the appeal of the assessee when the assessee failed to file any reply / submission to various opportunities allowed by the ld. Commissioner of Income-tax (Appeals). The ld. Counsel of the assessee at the outset, submitted that the case is squarely covered by the order passed by the ld. AO in the case of Guramrit Singh Gill, wherein the case of the assessee was reopened u/s 147 of the Act for the same reason and the ld. AO

5.

The ld. DR on the other hand stated that the fact of non execution of joint development agreement was never before the AO and accordingly was not verified by the ld. AO. The ld. DR submitted that in all fairness the appeal may be restored to the AO for the same very reasons.

6.

After hearing the rival contentions and perusing the materials available on record, we find that though the joint development agreement was entered into by the assessee with M/s Monark Dealcom Pvt. Ltd. in respect of landed property located at premises no.125A, Motilal Nehru Road, Kolkata of which he was 50% owner and remaining 50% belonged to Guramrit Singh Gill. We note that no money was ever received under this agreement and this was never performed or executed. We also note that the said land was sold by both the co-owners .i.e assessee as well as his brother Shri Guramrit Singh Gill on 28.08.2017 for the agreed consideration and the capital gain arose in the assessment year 2018-19 and would be paid accordingly. We observed that in the case of another co-owners Shi Guramrit Singh Gill, the same plea has been accepted by the ld. AO in the reassessment proceedings for the same assessment year 2013-14 and no addition was made. The relevant paras are extracted below:-

8.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 24.02.2025.

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